The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Marathon Petroleum Corp (NYSE:MPC) and determine whether the smart money was really smart about this stock.
Is Marathon Petroleum Corp (NYSE:MPC) an excellent investment now? The best stock pickers were betting on the stock. The number of bullish hedge fund positions advanced by 5 lately. Marathon Petroleum Corp (NYSE:MPC) was in 62 hedge funds’ portfolios at the end of June. The all time high for this statistics is 72. Our calculations also showed that MPC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Andy Redleaf of Whitebox Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s take a glance at the new hedge fund action surrounding Marathon Petroleum Corp (NYSE:MPC).
How have hedgies been trading Marathon Petroleum Corp (NYSE:MPC)?
At the end of June, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 60 hedge funds with a bullish position in MPC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Elliott Investment Management was the largest shareholder of Marathon Petroleum Corp (NYSE:MPC), with a stake worth $361.5 million reported as of the end of September. Trailing Elliott Investment Management was Iridian Asset Management, which amassed a stake valued at $157.8 million. Elliott Investment Management, Whitebox Advisors, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Knighthead Capital allocated the biggest weight to Marathon Petroleum Corp (NYSE:MPC), around 9.99% of its 13F portfolio. Whitebox Advisors is also relatively very bullish on the stock, earmarking 6.81 percent of its 13F equity portfolio to MPC.
As industrywide interest jumped, key money managers were breaking ground themselves. Knighthead Capital, managed by Tom Wagner and Ara Cohen, established the largest position in Marathon Petroleum Corp (NYSE:MPC). Knighthead Capital had $54.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $27.7 million position during the quarter. The other funds with new positions in the stock are Jeffrey Altman’s Owl Creek Asset Management, Matt Sirovich and Jeremy Mindich’s Scopia Capital, and John Petry’s Sessa Capital.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Marathon Petroleum Corp (NYSE:MPC) but similarly valued. We will take a look at Ford Motor Company (NYSE:F), Prudential Financial Inc (NYSE:PRU), Consolidated Edison, Inc. (NYSE:ED), Valero Energy Corporation (NYSE:VLO), Xilinx, Inc. (NASDAQ:XLNX), TransDigm Group Incorporated (NYSE:TDG), and McCormick & Company, Incorporated (NYSE:MKC). This group of stocks’ market valuations resemble MPC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| F | 30 | 791591 | -3 |
| PRU | 26 | 437049 | -2 |
| ED | 31 | 714139 | 6 |
| VLO | 39 | 157343 | -6 |
| XLNX | 47 | 1054542 | 9 |
| TDG | 62 | 6065530 | 4 |
| MKC | 32 | 251773 | 1 |
| Average | 38.1 | 1353138 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.1 hedge funds with bullish positions and the average amount invested in these stocks was $1353 million. That figure was $1445 million in MPC’s case. TransDigm Group Incorporated (NYSE:TDG) is the most popular stock in this table. On the other hand Prudential Financial Inc (NYSE:PRU) is the least popular one with only 26 bullish hedge fund positions. Marathon Petroleum Corp (NYSE:MPC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MPC is 85.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but beat the market by 20.6 percentage points. Unfortunately MPC wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on MPC were disappointed as the stock returned 0% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
